The Securities and Exchange Commission (SEC) submitted a proposed rule for interagency review on Aug. 28 that would rescind Rule 14a-8, the federal regulation requiring public companies to include qualifying shareholder proposals in their annual proxy statements. The proposal would also amend Rule 14a-4, which governs proxy solicitation materials.
Under the current rule, shareholders who meet minimum ownership thresholds can require companies to put proposals—on topics such as executive pay or climate policy—to a vote at annual meetings. Rescinding the rule would eliminate that federal requirement and shift jurisdiction over shareholder proposal disputes to the states where companies are legally incorporated.
A representative of SEC Chairman Paul Atkins said that Atkins "has highlighted concerns that the SEC's Rule 14a-8 on shareholder proposals exceeds the Commission’s authority and infringes upon state laws. To that end, the Commission is expected to consider a proposal to rescind the rule and return the role of regulating shareholder proposals to the states."
